European shares fell in early trades on Thursday, ahead of bank statements and digested the news that Greece is looking to raise €5 billion from bond markets to finance its debt. At the time of writing this report, FTSE 100 was down 0.04%.

In the US, the investor would be eagerly waiting for data related to Initial Claims for February 27, Continuing Claims for February 20, Productivity-Rev. and Unit Labor Costs for Q4, Factory Orders and Pending Home Sales for January.

Indian indices

The post-budget upbeat mood that have been continuing for three days on a trot seems to have taken a breather today. On the back of mixed global cues the Sensex opened 13 points higher at 17013. It rose for another 11 points to 17024, which was the day’s high. Mid-session, it shed over 100 points gradually on selling in information technology stocks to hit the day’s low of 16888. The market however remained volatile with the Sensex ending flat, down 28 points at 16971. Nifty ended the day at 5080, down 7 points.

Market sentiment

Despite ending low, the advance/decline ratio, the number of advancing shares to declining shares, was positive. Of the 2,937 stocks traded on BSE, where only 1,690 stocks advanced, 1,157 stocks declined. Ninety stocks remained unchanged

Sectoral & stock screening

Out of the 13 sector indices, eight managed to close in green, while Bankex, BSE Oil & Gas, BSE Teck and BSE IT closed in red. Buying interest extended gains in BSE Realty that rose 2.50% followed by BSE CD, the consumer durable index, and BSE Metal that closed 1.62% and 1.56 higher respectively. BSE IT slid the most by 1.03%.

On the stocks' front, Sesa Goa surged the most—by 6.78%—followed by Hindustan Zinc, which rose 5.53%, and Sintex Industries that jumped 5.18%. On the losers’ list, Zee Entertainment slid the most by 3.11%--followed by Indiabulls Financial Services, which declined 3% and Oriental Bank that down by 2.66%.

Shanghai Composite was leading the regional bourses to the downside with a 2% slide. After four consecutive winning sessions in Tokyo, Nikkei-225 was down 1%. Taiwan's Taiex was next in line of decliners, lower by 0.8% despite press speculation of Taiwan-China free-trade talks taking place in March, as massive 6.5 magnitude earthquake rocked the country. Sydney's S&P/ASX was the only regional gainer by 0.3%, while US equity futures saw a 0.4% slide to 1,114.

On Wall Street, stocks closed flat, despite improving signs for the economy in data and the Federal Reserve's beige book, after President Obama called on lawmakers to push forward on health care reform.

The beige book, which examines anecdotal economic conditions throughout the country found that while economic activity remains slow, the 12 districts reported modest improvements that were more widespread than the central bank's last report. The beige book, which will be used as a reference for the Federal Open Market Committee's meeting on 16 March, also found housing and labor markets remain weak, and price pressures continue to be subdued. But in a speech at about the same time, President Obama urged Congress to schedule a final vote on a health care bill, saying that the debate over the legislation has run its course.

Stocks sank soon after. The Dow Jones Industrial Average, which was up more than 50 points earlier in the session, lost 9 points, or 0.1%, at 10,397. The S&P 500 added about half a point to 1119 and the Nasdaq finished largely flat at 2281.

In commodity market, crude oil traded near $81 a barrel after rising yesterday as reports showed improvement in the U.S. job market and refineries operated at the highest level since October in the world's biggest energy consumer.

Oil climbed to a seven-week high yesterday as service industries in the U.S. accelerated in February more than anticipated, indicating the economic expansion may soon create jobs following the worst employment slump in the post-World War II era. Inventories of crude oil rose 4.03 million barrels and refinery utilization increased 0.7% in the U.S. last week, according to the Energy Department.

Crude oil for April delivery was at $80.65 a barrel, down 22 cents, in electronic trading on the New York Mercantile Exchange at 1:23 p.m. Singapore time. Yesterday, the contract increased $1.19, or 1.5%, to $80.87, the highest settlement since 11 January 2010.

Brent crude oil for April delivery traded at $79.05 a barrel, down 20 cents, on the London-based ICE Futures Europe exchange at 1:22 p.m. Singapore time. Yesterday, the contract climbed $1.07, or 1.4%, to $79.25.

Gold dropped for the first time in six days as the dollar rebounded and investors sold the metal to lock in gains after the longest rally in five months. Gold for immediate delivery fell as much as 0.4% to $1,135.30 an ounce, and traded at $1,135.83 at 2:16 p.m. in Singapore. Bullion gained 3.8% in the past five days, the longest winning streak since the period ending 8 October 2009.

In the currency market, the U.S. dollar continued to trade with a mixed tone in late Asian trade Thursday, slipping to session lows against the yen but keeping a firm foothold versus the euro ahead of key events, including a European Central Bank meeting later.

The Japanese yen strengthened against major currencies on Thursday in Asia. Investors were watching most is whether the yen will weaken or rise against the dollar. The movements of USD/JPY likely depend on outcome of jobs data due out Friday. The Japan's currency yen was quoted at 88.42 against the greenback.

The Hong Kong dollar was trading at HK$ 7.7629 against the dollar. Actually the Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In Sydney trades, the Australian dollar slipped after the resource-sensitive currency came under pressure from declining commodity prices. At the local close, the dollar was trading at $US0.9016, down from Wednesday's close of $US0.9051. Since 7am, the local unit traded between $US0.9011 and $US0.9063.

In Wellington trades, the New Zealand dollar eased along with other currencies as the US dollar rose and was back at new near-decade low against its trans-Tasman counterpart. The NZ dollar was at US68.99c at 5pm from US69.70c at 5pm yesterday.

The South Korean won closed at 1,144.60 won to the greenback, up 1.90 won from Wednesday's close of 1,146.50, as easing Greek woes stoked investor appetite for risky assets.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 31.9880, 0.0160 up from Wednesday's close of NT$ 32.0040.

In equities, Asian shares were mostly lower as Wall Street's tepid performance Wednesday failed to inspire markets, but shippers were up in Japan and mining plays were supporting Australian stocks.

In Japan, the key indices widened losses in the afternoon and finishing at 1.1% below the line as stronger yen and cautious ahead of US non farm payrolls report tomorrow shrugged off initial buying incentives from fresh austerity measures announced by Greece to rein in its ballooning debt. Selling in afternoon was also triggered by tracking losses in other key Asian equities including Chinese and Hong Kong shares.

Greece announced cost-cutting measures Wednesday that will save the debt-challenged country 4.8 billion euro, ($6.53 billion) this year. Officials expect the measures will reduce Greece's budget deficit to 8.7% of the country's gross domestic product this year from a level of 12.7% last year, according to the report.

At the closing bell, the Nikkei 225 Stock Average index was at 10,145.72, eased 107.42 points, or 1.05%. The broader Topix of all First Section issues on the Tokyo Stock Exchange erased 8.01 points, or 0.88%, to 897.64.

On the economic front, the Ministry of Finance survey released Thursday showed that capital expenditure was down 17.3% on year in the October-December period. But the fall was milder than the 24.8% drop in the July-September quarter. The quarterly survey also showed that ordinary profits were up 102.2% on year, compared with a 32.4% fall in the July-September period. Sales were down 3.1% compared with their 15.7% fall in the previous quarter

In Mainland China, the key indices stumbled on broad based slumps across the sector as investors scrambled to unload shares for quick profits amid concerns government tightening measure would curb economic growth and companies earning. Selling pressure was further intensified in afternoon on tracking losses in other key Asian equities markets and cautious ahead of the start of the country's annual legislative session Friday and US non-farm jobs data due out tomorrow.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, surrendered 73.63 points, or 2.38%, to 3,023.37. The Shenzhen Component Index on the smaller Shenzhen Stock Exchange fell 299.80 points, or 2.38%, to 12,312.89. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, has lost 2.53%, to 3,250.57.

In Hong Kong, the key indices extended morning loses in afternoon trades and finished nearly 1.4% below the line, with banks and financials led the retreat amid renewed fundraising and slower earning growth amid the credit tightening measures. Steep sell off in China Mobile on concern telecom giant might deviate from its main business weighed on telecom sector.

In Australia, late flourish in the share market helped benchmark indices to registered fifth consecutive gains, as strength in mining, retailers, and property trusts. The key indices opened with positive note after fresh austerity measures announced by Greece to rein in its ballooning debt, but turned lower in the afternoon trade amid caution after the US Federal Reserve signaled that the economic recovery would be slow because of weak demand for loans and a mostly soft job market. Moreover, late round of short covering helped the market to close in black.

At the closing bell, the benchmark S&P/ASX200 index was at 4,750.50 rose 14.80 points, or 0.31%. The broader All Ordinaries was at 4,757.60, added 13.80 points, or 0.29%.

On the economic front, the Australian Bureau of Statistics said Thursday that the balance on goods and services was a deficit of A$1.176 billion in January 2010 in inflation adjusted terms, decline of A$998 million on the revised deficit of A$2.174 billion in December 2009.

In New Zealand, the equities moved forward to end on a positive note. The benchmark index gained since early hours today up almost 5.44 points to 3203.96. The index has lifted for the previous six straight trading days, as it pulls away from a 5-1/2 month low around 3060 in mid-February. The benchmark index is correctly trading at more than a months high after dipping down sharply during the month of February. At the closing today, the NZX 50 added 0.42% or 13.35 points to 3213.56. Meanwhile, the NZX 15 gained 0.54% or 31.06 points to close at 5750.64.

In South Korea, stocks finished lower on Thursday as investors slowed purchases ahead of the opening of China's parliament and key U.S. macroeconomic data due this week. The benchmark Korea Composite Stock Price Index (KOSPI) dropped 4.24 points to 1,618.20, ending a three-session winning streak.

In Singapore, the key indices widened losses in the afternoon and finished down, as worries about Greece and the gloomy outlook for the global economy made investors cautious. Interest rate sensitive companies including banks and properties also ranked in retreat, while palm oil producers and manufacturing companies shares were lower in technical correction after yesterday's gains. At the closing bell, the blue chip Straits Times Index was at 2,768.70, slid 14.09 points or 0.51%.

In Taiwan, stock markets finished at a near one-week closing low, with technology firms leading, first on concerns a strong earthquake might affect output and then on worries about demand. A 6.4 magnitude earthquake hit southern Taiwan early on Thursday in an area where many hi-tech firms have production sites, but there was little effect on operations. While the quake initially caused tech stocks to fall, they remained lower as investors focused on the outlook for demand. The benchmark Taiex share index failed to extend its gains in fifth session as it ended the day lower by 59.72 points or 0.78% at 7569.80.

In India, key benchmark indices ended with small losses after witnessing intraday volatility. Fears of rise in interest rates following rise in food inflation weighed on the sentiment. Weak global cues played the spoilsport after strong gains on the domestic bourses over the past three trading session. Firm global stocks had aided the rally on the domestic bourses recently. The Sensex fell below the psychological 17,000 mark. It had settled a tad above the 17,000 level on Wednesday, 3 March 2010. The BSE 30-share Sensex was down 28.31 points or 0.17% to 16,971.70. The S&P CNX Nifty was down 7.85 points or 0.15% to 5080.25.

Elsewhere, Malaysia's Kula Lumpur Composite index finished was little changed at 1284.09 while stock markets in Indonesia's Jakarta Composite index gave up by 1.44 points ending the day lower at 2565.64.

In other market, European shares traded lower, declining after four sessions of gains, with investors still cautious about Greece's fiscal position as they wait for interest rate decisions from two of the region's top central banks. On the regional level, the U.K. FTSE 100 index declined 0.4% to 5,512.96, the German DAX index lost 0.7% to 5,779.74 and the French CAC-40 index lost 0.6% to 3,818.80.

Key benchmark indices ended slightly lower after witnessing intraday volatility, ending three-day winning streak. Fears of rise in interest rates following rise in food inflation weighed on the sentiment. Weak global cues also played spoilsport after strong gains on the domestic bourses over the past three trading session. Firm global stocks had aided the rally on the domestic bourses recently. The BSE 30-share Sensex was down 28.31 points or 0.17%, up 83.65 points from the day's low and off 53.26 points from the day's high. The Sensex fell below the psychological 17,000 mark. It had settled a tad above the 17,000 level on Wednesday, 3 March 2010.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, rose after a recent steep slide. The index rose 1.11% to 20.98. The index had witnessed a steep fall in the previous three trading sessions after the government tabled the Union Budget for 2010-2011 in the parliament on Friday, 26 February 2010. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. Typically, volatility surges ahead of a major event such as the Budget. It falls after the event.

The market drifted lower in early trade on profit taking after last three days' strong gains triggered by the finance minister's pledge to cut fiscal deficit in the Union Budget 2010-2011 late last week. The market recovered from lower level in morning trade. However, the intraday recovered proved short-lived. The Sensex hit a fresh intraday low in early afternoon trade. The market once again cut losses in mid-afternoon trade as select index pivotals rebounded from lower level.

Food price index rose 17.87% in the 12 months to 20 February 2010, faster than the annual rise of 17.58% in the previous week, government data released today, 4 March 2010 showed. The fuel price index was up 9.59%. The primary articles index rose 15%. Higher inflation is likely to add pressure on the central bank to raise interest rates in April 2010.

The latest hike in petrol and diesel prices will further increase headline inflation. Higher inflation will put further pressure on interest rates which in turn may impact corporate and consumer confidence. However, Prime Minister Manmohan Singh on Monday tried to allay fears of fuel price hike stoking inflation. He said the direct effect on the Wholesale Price Index (WPI) will be no more than 0.4%.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the fuel price rise. Market men see a 25 basis points hike in the repo and reverse repo rates each by the RBI at the April 2010 policy review.

Congress president Sonia Gandhi has reportedly signaled her support for a move to raise taxes on fuel in last year's Budget. The Congress president has reportedly praised finance minister Pranab Mukherjee for a well-balanced budget and said growth is the engine of the Budget

Prime Minister Manmohan Singh had earlier ruled out rolling back a price hike in fuel prices despite pressure from his main allies, saying populist policies would hurt the economy in the long-term. Petrol prices rose about 6% and diesel prices by 7.75% after the government increased factory-gate taxes and import duties on the fuels as part of last week's 2010-11 union budget 2010-11, which stressed fiscal prudence to cut a wide deficit

Coming back to equities, the market breadth, indicating the overall health of the market, was strong. Telecom shares gained on fresh buying. Banking shares were mixed ahead of a meeting of bankers with the Reserve Bank of India tomorrow, 5 March 2010 to discuss the implementation of the base rate. Auto stocks declined on profit booking. Software pivotals slipped on reports top IT firms are mulling salary hike for the financial year 2010-11, which will impact profitability.

Business activity among Indian service companies grew at its fastest pace in 17 months in February 2010, climbing for the third straight month as both output and new orders increased, a survey showed on Wednesday, 3 March 2010. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 60.9 in February 2010, its highest since September 2008, and compared with 59 in January 2010. The business expectations sub-index rose for the second straight month to 73.1 in February 2010, its highest in four months. It stood at 66.6 in January 2010.

European stocks were lower Thursday as investors adopted a cautious stance ahead of key meetings of the Bank of England (BOE) and European Central Bank (ECB). As per market expectations, both the BOE and ECB are widely expected to keep rates at record lows. Key benchmark indices in UK, Germany and France were down by between 0.09% to 0.37%.

On Wednesday, Greece announced further austerity measures designed at getting its fiscal deficit down to levels acceptable to the rest of Europe. Ongoing worries about Greek debt are expected to be one reason for the European Central Bank policymakers to keep rates on hold on Thursday.

Asian shares were trading lower Thursday as Wall Street's tepid performance Wednesday failed to inspire markets, but shippers were up in Japan and mining plays were supporting Australian stocks. Investors were cautious ahead of the influential US jobs data for February 2010 on Friday, 5 March 2010. The key benchmark indices in Hong Kong, South Korea, Singapore, China, Japan and Taiwan were down by between 0.26% to 2.38%.

Wall Street ended little changed on Wednesday, 3 March 2010 as worries about bank regulation and a setback for drug company Pfizer offset signs of improvement in the labor market and services sector. The Dow Jones Industrial Average was down 9.22 points, or 0.09%, to 10,396.76 and the Nasdaq Composite Index fell 0.11 point at 2,280.68. However, the Standard & Poor's 500 Index was up 0.48 points, or 0.04%, at 1,118.79.

The Beige Book survey of economic conditions released Wednesday by the Federal Reserve gave mixed signals about prospects for the US economy. The economy again improved modestly in February, the survey said, but loan demand remained weak and there were no signs of improvement in the labor market.

Meanwhile President Barack Obama's administration moved to rein in America's largest banks Wednesday, sending Congress new rules blocking mega-mergers and barring investments seen as too risky. With Obama's presidency still dominated by the economic fallout from the banking crisis, the Treasury sent lawmakers proposed new rules that would prevent financial firms from becoming "too-big-to-fail."

The rules would ban government-insured banks from mergers and takeovers if the new company would hold more than 10% of the sector's debt, according to the proposals. Banks would also be barred from trading in stocks or other, sometimes risky, financial instruments for their own benefit -- so-called proprietary trading. The Obama administration was forced to pump hundreds of billions of dollars into the US financial sector to cover losses from complex financial investments linked to the subprime mortgages.

Trading in US index futures indicated a flat opening of US markets on Thursday, 4 March 2010.

Closer home, Finance minister Pranab Mukherjee's budgetary proposals last week offered a progressive cut in fiscal deficit over the next three fiscal years, changed personal tax rates lifting disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10%.

The Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011. The peak rate of excise duties has been raised to 10% from 8% as a first step towards the winding down of fiscal stimulus measures. However, the service tax was retained at 10%. The government has estimated Rs 40000 crore from disinvestment for FY 2010-11. It has estimated Rs 35000 crore from sale of third generation telecom auctions.

The finance minister has raised personal income tax slabs which will result in increase in disposable incomes which in turn may boost consumption. The minimum alternate tax (MAT) has been raised to 18% from 15% of book profits. The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The planned expenditure will rise 15% in 2010-2011. The increase in non-plan expenditure is only 6% for 2010-2011.

The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

The Finance Minister plans to tighten his belt on non-plan expenditure that includes heads like subsidies and administrative costs etc. He has forecast a small 6% growth in non-plan expenditure. The budget projects an 11% reduction in the government's subsidy bill for 2010-11, driven essentially by a massive drop in petroleum subsidies and some decline in fertiliser subsidies.

However, any sharp surge in crude oil prices will result in higher oil subsidies. The Finance Minister has provided only Rs 3108 crore towards oil subsidy for 2010-2011 and also indicated that he will not issue bonds this year as well. This means that he is either assuming that crude oil prices are going to remain very low or he is making an implicit assumption that the Kirit Parikh Committee report in some form will be implemented. It may be recalled that the Kirit Parikh Committee has suggested freeing of auto fuel prices and raising kerosene prices by Rs 6 a litre and cooking gas Rs 100 per 14.2-kg cylinder.

As per reports, the finance ministry has budgeted only Rs 14,954 crore cash compensation for the three state-owned oil marketing firms (PSU OMCs) for 2009-10 against their demand of Rs 31,000 crore for selling cooking fuel below the cost. Additionally, the three PSU OMCs will make a revenue loss of around Rs 14,000 crore on retail sale of petrol and diesel in the current financial year, which will be fully met by the upstream companies - ONGC, Oil India and Gail India.

Earlier, PSU OMCs were given oil bonds to make up their revenue losses, but on Friday, the Finance Minister made it clear that the government was against continued fuel subsidies and would not give oil bonds.

Though the Finance Minister said that the government will implement the Direct Tax Code from 1 April 2011, there is no clarity on actual changes in direct taxes from 1 April 2011. Further, there is also uncertainty with regards to rates under the new GST. One really does not know what the Central GST rate will be in April 2011. States also will charge State GST on the same base as that of Central GST. So the States will have a big say in fixing the rate. It has also to be a revenue neutral rate (RNR) which therefore will involve a lot of arithmetical exercise involving all the taxes which will be subsumed in the GST. It is most uncertain what it will be.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

Finance Minister Pranab Mukherjee on Wednesday said India's economic recovery is still being driven by public spending and is not yet broad-based, further clouding the debate on the timing of rate hikes by the central bank.

The economy is likely to do better in the quarter to March than the three preceding quarters, Finance Secretary Ashok Chawla said on Friday, 26 February 2010. The economy grew a slower than expected 6% annually in the December quarter, data showed on Friday.

The manufacturing industry in February 2010 grew at its fastest pace in 20 months, expanding for the third month thanks to expanding output and new orders, a survey showed. The HSBC Markit Purchasing Managers' Index , based on a survey of 500 companies, rose to 58.5 in February, its strongest reading since June 2008, from 57.7 in January. A reading above 50 means activity is expanding.

Exports rose an annual 11.5% in January 2010 to $14.3 billion, the third consecutive rise after 13 straight months of decline, the government said on Tuesday. Imports rose 35.5% from a year earlier to $24.7 billion. The trade deficit stood at $10.4 billion in January compared with $5.4 billion a year earlier. Exports for April-January, the first 10 months of the 2009/10 fiscal year, were down 17.8% at $131.9 billion from the same period in the previous year.

The BSE 30-share Sensex was down 28.31 points or 0.17% to 16,971.70. The index fell 111.96 points at the day's low of 16,888.05 in afternoon trade. The Sensex rose 24.95 points at the day's high of 17,024.96 in early trade.

The S&P CNX Nifty was down 7.85 points or 0.15% to 5080.25

The market breadth, indicating the overall health of the market, was strong. On BSE, 1721 shares advanced as compared with 1173 that declined. A total of 77 shares remained unchanged.

The BSE Mid-Cap index rose 0.78% to 6,693.93 and the BSE Small-Cap index rose 0.81% to 8,430.32. Both these indices outperformed the Sensex.

Telecom shares gained on fresh buying. India's second largest cellular services provider by sales Reliance Communications surged 2.12% to Rs 164.10 and was the top gainer from the Sensex pack. India's largest cellular services provider by sales Bharti Airtel rose 0.07%.

The Centre on 25 February 2010 issued notices inviting bids from private telecom players to participate in the auction of radio frequency spectrum for third generation (3G) telephony. The schedule calls for the process to end on 10 April 2010. The government also said auction for spectrum for broadband services will also be held two days after the process concludes for 3G spectrum.

3G or third generation telecom services allow faster connectivity than what is available now, and will enable applications such as internet TV, video-on-demand, audio-video calls and high-speed data exchange.

Realty shares gained after the Finance Minister while presenting the Union Budget 2010-11 said pending projects will be allowed to be completed within a period of five years instead of four years for claiming a deduction on profits. The norms for built-up area of shops and other commercial establishments in housing projects is also proposed to be relaxed to enable basic facilities for their residents.

Banking shares were mixed ahead of the meeting of bankers with the Reserve Bank of India tomorrow, 5 March 2010 to discuss the implementation of the base rate. India's largest bank by net profit and branch network State Bank of India rose 0.71%. India's second largest private sector bank by net profit HDFC Bank rose 0.06%

As per reports, with the 1 April 2010 deadline to migrate to the base rate model fast approaching, bank chiefs are likely to raise concerns about the new system and seek an extension of the deadline during their scheduled meeting with top Reserve Bank (RBI) officials tomorrow. The base rate is a function of the cost of deposits.

IT pivotals slipped on reports the three IT majors Infosys, Wipro and TCS are mulling salary hike for the financial year 2010-11, which will impact profitability. According to a media reports, the three IT giants are planning to hike salaries in the 8% to 12% range from 1 April 2010.

India's second largest software firm by sales Infosys Technologies lost 0.98% and India's largest software firm by sales TCS slipped 0.90%.

The rupee rose to fresh six week highs on Thursday as strong regional peers boosted sentiment, but marginal losses in the domestic stock market prevented a further sharp upside. The partially convertible rupee was at 45.80/81 per dollar, slightly stronger than 45.82/83 at close on Wednesday. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Index heavyweight Reliance Industries (RIL) fell 0.89% to Rs 1012.90, off the day's high of Rs 1033.50. The stock halted three-day gains on profit booking. As per reports, RIL has no plans to increase its bid for bankrupt chemicals maker LyondellBasell Industries after creditors rejected a $14.5 billion offer.

Auto stocks dipped on profit booking after the recent gains which came on the back of the government announcing hike in excise duty by 2% to 10% from 8%. This came as a relief as the industry feared a 4% hike. A thrust on infrastructure and higher rural spending also augur well for the auto sector.

India's largest two-wheeler maker Hero Honda Motors fell 0.27%. The company on Tuesday reported a 16.13% increase in its sales at 3,82,096 units in February 2010 over February 2009, the best-ever reported by the company for the month of February.

India's largest car maker by sales Maruti Suzuki India fell 1.31%. The total vehicle sales rose 22% to 96,650 units in February 2010 over February 2009. The company has raised vehicle prices by Rs 3,000-Rs 13,000 following increase in excise duty in the Budget.

India's largest commercial vehicle maker by sales Tata Motors fell 0.07% to Rs 806.95. The stock oscillated in a band of Rs 828.50 - Rs 798.20 in volatile trade. The company's total vehicle sales rose 58.46% to 69,427 units in February 2010 over February 2009.

India's largest tractor maker by sales Mahindra & Mahindra rose 0.07%. The company's total vehicle sales surged 39.51% to 27,894 units in February 2010 over February 2009.

India's second largest private sector power generation firm by sales Tata Power declined 0.35% to Rs 1329.90. Three bulk deals aggregating 22.50 lakh shares were executed on Tata Power scrip in opening trade on BSE at an average price of Rs 1337.51 a piece.

India's largest non-ferrous metal maker by sales Sterlite Industries India rose 0.08% after the company's American depository receipt, or ADR rose 2.22% to $17.93 on the New York Stock Exchange on Wednesday, 3 March 2010.

Sesa Goa soared 7.27% as strong demand lifted spot iron ore prices over the past few months. The stock hit a lifetime high of Rs 457.35 in intra-day trade today, 4 March 2010.

Hindustan Zinc surged 5.53% as metal prices rose on the London Metal Exchange on Wednesday, 3 March 2010.

Shipping shares rose after the Baltic dry index, which tracks rates to ship dry commodities, jumped 4.26% to 2,911 in London on Wednesday, 3 March 2010.

The Baltic Dry Index (BDI) is showing signs of recovery in the New Year. During the depth of the global economic crisis in 2008, the BDI shed 90% of its value. In fact, from an all time high of 11,793 on 20 May 2008, the index nosedived to an all-time low of 663 in October 2008 as the global demand for raw materials slumped.

Moser Baer India climbed 5.07% after the government last week in its Union Budget for 2010-2011 offered tax breaks on products needed to set up solar power plants.

Sulzer India was locked at upper limit of 20% after the company said its Swiss parent plans to acquire the remaining stake of the company and delist its shares from the stock exchanges. The announcement was made during trading hours today, 4 March 2010.

Titan Industries rose 3.80% after the company's managing director Bhaskar Bhat told the media today, 4 March 2010, that the firm plans capital expenditure of about Rs 100 crore in the financial year 2010-2011.

Precious metal prices ended higher and almost touched its 2010 highs on Wednesday, 03 March, 2010. Prices rose as the dollar slipped against the euro increasing precious metal's appeal against an alternate investment.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Wednesday, gold for April delivery ended at $1,143.3 an ounce, higher by $5.9 (0.5%) an ounce on the New York Mercantile Exchange. Earlier during intra day trading, it touched a high of $1,145.8. In FY 2010, gold touched a high of $1,154 in January.

On Wednesday, May Comex silver futures ended higher by 27 cents at $17.33 an ounce.

In the currency market on Wednesday, the dollar weakened against the euro after Greece disclosed its pathway to reduce the budgetary deficit. The dollar index dropped by almost 0.6% during the day.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for April delivery closed higher by Rs 8 (0.04%) at Rs 17,028 per ten grams. Prices rose to a high of Rs 17,095 per 10 grams and fell to a low of Rs 16,956 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 282 (1%) higher at Rs 26,973/Kg. Prices opened at Rs 26,670/kg and rose to a high of Rs 27,080/Kg during the day's trading.

Crude prices ended higher on Wednesday, 03 March, 2010. Prices rose as the dollar slipped against the euro increasing commodities' appeal against an alternate investment. The price rise was partly offset by the latest weekly inventory report that showed rising crude stockpiles for last week.

On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $80.72/barrel (higher by $1.04 or 1.3%). During intra day trading, crude rose to a high of $81.31.

Crude prices rose 9.3% in February as supply-and-demand issues began to take hold in a market for months dominated by moves in the dollar. Last week, crude ended off 0.5%. Prices have ranged between $69 and $84 a barrel since October.

The EIA reported today that crude-oil stockpiles rose 4.1 million barrels last week, topping the 1.1 million barrels expected by market.

In the currency market on Wednesday, the dollar weakened against the euro after Greece disclosed its pathway to reduce the budgetary deficit. The dollar index dropped by almost 0.6% during the day.

Among other energy products, gasoline futures gained 4 cents, or 2%, to $2.24 a gallon, while heating oil futures added 3 cents, or 1.6%, to $2.088 a gallon.

Also on Wednesday, natural gas for April delivery added 3 cents, or 0.7%, to $4.74 per million British thermal units.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 45% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 15 (0.4%) lower at Rs 3,687/barrel. Natural gas for March delivery closed at Rs 219/mmbtu, higher by Rs 2 (0.92%).

European shares closed higher on Wednesday, boosted by U.S. economic data, optimism on Greece's deficit, and with Standard Chartered rising after results.

On Wednesday, US stocks closed marginally lower, as worries about bank regulation and a setback for drug company Pfizer offset signs of improvement in the labor market and services sector.

In today's trade, all the Asian indices are trading in positive territory, except Nikkei and Kospi. At the time of writing of this report SGX Nifty trades 2 points higher.

Indian markets

Indian markets may open flat and bulls are likely to take a pause as mix signals coming from the global markets. As Sensex closed at 17000 level in yesterday’s session, indicating that the market is indeed under the control of the bulls. Market may remain volatile throughout the session.

Commodity cues

In the commodity space, Crude oil prices recorded marginal gain, with the Nymex light crude oil for April series rises by $0.06 per barrel, whereas in the metals space, Comex Gold for April series and Comex Silver for May series up by $6.60 and $0.25 to a troy ounce respectively.

Daily trend of FII/MF investment in equities

On March 03, 2010, FIIs were the net buyers of the Indian Stocks in the tune of Rs1534.70, whereas the Domestic mutual funds, on March 02, 2010, were the net sellers of the stocks in the tune of Rs179.70 crore.

Profit booking is likely to pull the market lower after fourth straight sessions of gains. Global cues were mildly positive. The S&P CNX Nifty futures for March 2010 expiry were trading unchanged in Singapore. The government will unveil data on some wholesale price indices for the year through 20 February 2010 viz. the food price index, the primary articles index and the fuel price index at 12:00 IST today.

As per reports, finance minister Pranab Mukherjee is unlikely to roll back the recent hike in fuel prices. Prime Minister Manmohan Singh had earlier ruled out rolling back a price hike in fuel prices despite pressure from his main allies, saying populist policies would hurt the economy in the long-term. Petrol prices rose about 6% and diesel prices by 7.75% after the government increased factory-gate taxes and import duties on the fuels as part of last week's 2010-11 union budget 2010-11, which stressed fiscal prudence to cut a wide deficit.

Reliance Industries may see action on reports the company has no plans to increase its bid for bankrupt chemicals maker LyondellBasell Industries after creditors rejected a $14.5 billion offer.

Most Asian stocks rose led by mining companies and banks, after oil and metal prices gained. However, Japanese automakers fell as the yen strengthened. The key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan rose by between 0.04% to 0.26%. But, China's Shanghai Composite fell 0.14% and Japan's Nikkei 225 index slipped 0.03%.

Wall Street ended little changed on Wednesday, 3 March 2010 as worries about bank regulation and a setback for drug company Pfizer offset signs of improvement in the labor market and services sector. The Dow Jones Industrial Average was down 9.22 points, or 0.09%, to 10,396.76 and the Nasdaq Composite Index fell 0.11 point at 2,280.68. However, the Standard & Poor's 500 Index was up 0.48%, or 0.04%, at 1,118.79.

Back home, key benchmark indices extended gains for a fourth consecutive day on Wednesday, 3 March 2010 after the Finance Minister on 26 February 2010 pledged to cut fiscal deficit in the Union Budget. The BSE Sensex rose 227.45 points or 1.36% to at 17,000.01 and the NSE Nifty rose 71.1 points or 1.42% to 5088.10.

Finance minister Pranab Mukherjee's bold budgetary proposals offered a progressive cut in fiscal deficit over the next three fiscal years, changed personal tax rates lifting disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10%.

The Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011. The peak rate of excise duties has been raised to 10% from 8% as a first step towards the winding down of fiscal stimulus measures. However, the service tax was retained at 10%. The government has estimated Rs 40000 crore from disinvestment for FY 2010-11. It has estimated Rs 35000 crore from sale of third generation telecom auctions.

The finance minister has raised personal income tax slabs which will result in increase in disposable incomes which in turn may boost consumption. The minimum alternate tax (MAT) has been raised to 18% from 15% of book profits. The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The planned expenditure will rise 15% in 2010-2011. The increase in non-plan expenditure is only 6% for 2010-2011. The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

Though the Finance Minister said that the government will implement the Direct Tax Code from 1 April 2011, there is no clarity on actual changes in direct taxes from 1 April 2011. Further, there is also uncertainty with regards to rates under the new GST. One really does not know what the Central GST rate will be in April 2011. States also will charge State GST on the same base as that of Central GST. So the States will have a big say in fixing the rate. It has also to be a revenue neutral rate (RNR) which therefore will involve a lot of arithmetical exercise involving all the taxes which will be subsumed in the GST. It is most uncertain what it will be.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

Meanwhile, the latest hike in petrol and diesel prices will further increase headline inflation. Higher inflation will put further pressure on interest rates which in turn may impact corporate and consumer confidence. However, Prime Minister Manmohan Singh on Monday tried to allay fears of fuel price hike stoking inflation. He said the direct effect on the Wholesale Price Index (WPI) will be no more than 0.4%.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the fuel price rise. Market men see a 25 basis points hike in the repo and reverse repo rates each by the RBI at the April 2010 policy review.

The economy is likely to do better in the quarter to March than the three preceding quarters, Finance Secretary Ashok Chawla said on Friday 26 February 2010. The economy grew a slower than expected 6% annually in the December quarter, data showed on Friday.

The manufacturing industry in February 2010 grew at its fastest pace in 20 months, expanding for the third month thanks to expanding output and new orders, a survey showed. The HSBC Markit Purchasing Managers' Index , based on a survey of 500 companies, rose to 58.5 in February, its strongest reading since June 2008, from 57.7 in January. A reading above 50 means activity is expanding.

Exports rose an annual 11.5% in January 2010 to $14.3 billion, the third consecutive rise after 13 straight months of decline, the government said on Tuesday. Imports rose 35.5% from a year earlier to $24.7 billion. The trade deficit stood at $10.4 billion in January compared with $5.4 billion a year earlier. Exports for April-January, the first 10 months of the 2009/10 fiscal year, were down 17.8% at $131.9 billion from the same period in the previous year.

The bulls seem to be able to bear any apprehensions for now. It’s not as if risk appetite is increasing, but who wants to miss a joyride! The indices have been on a firm footing as the health of the Indian economy appears to be getting better by the day. The Auto and cement numbers have given some reason to cheer. For those who rejoice in numbers of any kind, the total market cap of all the listed firms on the BSE has surged to Rs60,742bn, adding Rs2,410bn in three trading sessions since Budget Day.

With Finance Minister making it clear that fuel price rise is here to stay, keeping inflation under control will remain a challenge.

A flat start is in the offing; a reversal of recent fortunes could well take place during the day depending on how the global events pan out. Expectations though are that the Nifty may breach the 5100 mark before any worthwhile correction. The Asian markets are indecisive for now. US indices wiped out gains following worries about the job and manufacturing reports expected in the coming days. Positive economic news took a back seat towards the end.

The Fed's periodic "Beige Book" reading on the economy showed that economic activity picked up somewhat in 9 of the Fed's 12 districts. Consumer spending also improved modestly, the report indicated.

The European Union said it will more closely regulate the economies of its 27 members so as to avoid a repeat of the Greece crisis, a report stated. In an attempt to cut its deficit, Greece announced a $6.5 billion plan including $3.3bn in new revenues and ~$3.3 billion in spending cuts, which include pension freezes and cuts in civil servants' salaries.

Hedge fund Elliott Associates made an unsolicited all-cash offer for Novell offering to buy the remaining 91.5% of the company for around $5.75 per share, or $1.83 billion. The price is a 21% premium over Novell's closing stock price from Tuesday.

US light crude oil for April delivery rose $1.19 to settle at $80.87 a barrel on the New York Mercantile ExchangeAfter two successive days of Budget-related gains, the Indian markets further extended its upswing on Wednesday as the BSE Sensex reclaimed 17,000 mark for the first time since January 21, 2010. The index took ~27 trading session to recapture the milestone.

Today’s stellar performance was led by index heavyweight Reliance Industries, the stock single handedly lifted the Sensex nearly 80 points followed by ICICI Bank and HDFC Bank contributing 15 points each. The Oil & Gas, Realty and Power stocks were in the limelight, even Mid-Cap Banking stocks were among the notable gainers.

The BSE Sensex advanced 227 points to end at 17,000 after touching a high of 17,012 and a low of 16,778. The Nifty advanced 71 points to end at 5,088.

Equity markets in Asia were mixed. The Nikkei in Japan was up 0.3%, while Australia's S&P/ASX ended higher by 0.7%. The Shanghai SE Composite gained 0.8% and Hang Seng index in Hong Kong was down 0.2%.

In Europe, stocks were trading in the red. The DAX in Germany was down 0.3% and the CAC 40 index in France was down 0.4%. The FTSE in the UK was down 0.2%.

Coming back to India, among the BSE sectoral indices, the Oil & Gas index was the top gainer, adding 2.2%, followed by the Realty index that was up 2.1% and the BSE Power index was up 1.9%. Even the BSE Mid-Cap index gained 1.5% while the BSE Small-Cap index was up 1.2%.

Among the 30-components of Sensex, 24 stocks ended in the positive terrain and 6 ended in the red. JP Associates, Tata Power, Reliance Industries, NTPC and M&M were among the top gainers.

On the other hand, among the major losers were ONGC, Maruti, L&T, ACC and Wipro.

Outside the frontline indices, the big gainers in the broader market were Jet Airways, Asian Paints, EKC, OBC and Renuka Sugars. On the other hand, losers included Shriram Transport, BOB and Chambal Fert.

Shares of Reliance Industries were back above the Rs1000 mark, the stock surged by 4% to end at Rs1025 as reports stated that the board of bankrupt LyondellBasell Industries AF rejected a US$14.5bn bid from the company. After having its US$13.5bn takeover bid rejected by the Rotterdam-based company, Reliance Industries raised its offer for a controlling stake to US$14.5bn.

Shares of Ashok Leyland advanced 1.2% to end at Rs52.7 after reports stated that Nissan is in talks with Hinduja Group Company for developing a small car mainly targeting the segment currently dominated by the Maruti Suzuki Alto.

"We are studying the possibility of tying up with Ashok Leyland and some other manufacturers in China and Indonesia for a small car project." Carlos Ghosn, the CEO of Nissan & Renault, was quoted as saying.

The small car project will be in addition to the ultra low-cost car that Nissan is planning to launch with its Indian partner Bajaj Auto, reports added.

It was announced in November last year, Renault, Nissan and Bajaj Auto will launch an ultra low-cost car in India in 2012 that will cost less than Tata Motor's Nano.

Shares of National Aluminium gained by 2.6% to Rs402 after the company won a bauxite mining permit from the Orissa state government, Ashok Mohadeo Rao Dalwai, Orissa’s steel and mines secretary, was quoted as saying.

The regional government’s permission to develop the mine, which has an initial estimated reserve of 70mn metric tons, will have to be cleared by the federal government, Dalwai said.

Shares of TCS gained by 1% to end at Rs768 after the company announced that it may sign a contract with the U.K.’s Personal Accounts Delivery Authority later this month for scheme administration services. The scrip opened at Rs769 it touched an intra-day high of Rs774 and a low of Rs764 and recorded volumes of over 1.3mn shares on NSE.

Shares of SREI Infra shot up by over 7% to end at Rs74 after Rakesh Jhunjhunwala, also know as the "Big Bull" picked up ~1.25mn shares, or 1.07% stake, in the non-banking finance company Srei Infrastructure Finance for about Rs84mn in two open market transactions.

The acquisition of shares was on and after the budget day after the finance minister announced plans to provide banking licences to eligible NBFCs.

According to the bulk deal, Jhunjhunwala’s wife Rekha Jhun-jhunwala picked up 0.625mn shares each on Friday and Tuesday at Rs65.11 and Rs 69.31per share, respectively.

Shares of Tricom India shot up by over 19.8% to end at Rs16.35 after Deutsche International Trust Corporation picked up 0.348mn equity shares of the company on Tuesday. The shares were picked at an average price of Rs13.6 per share.

The scrip opened at Rs14 it touched an intra-day high of Rs16.4 and a low of Rs13.5 and recorded volumes of over 1.7mn shares on NSE.

Rolta won an engineering design project for a significant nuclear reactor system of international importance. It is one of the first of its kind internationally and is a very complex and technically challenging engineering design project. Shares of Rolta ended flat at Rs179. The scrip opened at Rs180 it touched an intra-day high of Rs184 and a low of Rs178 and recorded volumes of over 3.9mn shares on NSE.

Unichem Laboratories announced that it received EU GMP certificate from IRISH MEDICINES BOARD for the 12 API's manufactured at company's Roha plant.

With this approval the company can market its approved API's in the whole of Europe.

Shares of Unichem Labs advanced 6% to end at Rs381. The scrip opened at Rs363 it touched an intra-day high of Rs386 and a low of Rs361 and recorded volumes of over 94,000 shares on NSE.

Shares of SpiceJet surged by 5% to end at Rs61.9 after media reports stated that the company was seeking government approval to start international operations. The scrip opened at Rs59.35 it touched an intra-day high of Rs62.3 and a low of Rs58.55 and recorded volumes of over 8.1mn shares on BSE.

Aurobindo Pharma received the approval for its Abbreviated New Drug Submission Cefuroxime Axetil Tablets 250mg & 500mg from Health Canada. This is Aurobindo's 8th product approval from Health Canada.

The stock gained by 1.7% to end at Rs939. The scrip opened at Rs926 it touched an intra-day high of Rs948 and a low of Rs917 and recorded volumes of over 0.27mn shares on NSE.